University "perplexed and disappointed" by government penalty

The provincial government announced Monday that McGill will be penalized $2,011,719 for the 2010-11 year after increasing tuition in their executive Master of Business Administration (MBA) program by around 900 per cent.

According to a statement released by the Ministère de l’Éducation, du Loisir et du Sport, the fine corresponds to the amount of provincial funding granted to McGill to train 200 students who could have enrolled in the program had prior accessibility levels been maintained. The penalty also includes the amount of provincial subsidy granted for each of the 57 MBA students enrolled in Fall 2010.

McGill increased tuition for its MBA program this year from roughly $2,000 to $29,500.

The Ministry press release stated that McGill’s “decision [to increase tuition] not only violates current budgetary rules, but also the principle of accessibility, as new students must pay tuition fees higher than those determined by the government.”

Line Beauchamp, minister of education, also said in the press release that the penalty “will be applied until the situation is corrected.”
SSMU VP External Myriam Zaidi said “it was a very bold reaction to a very bold move.”

“The principal can’t break the law, go against the government and normal process, and not expect to get any punishment from that,” said Zaidi. “They went against basically Quebec’s constitution.”

In a statement released the following day, McGill said they were “perplexed and disappointed with the response of the Government of Quebec.” The press release went on to state that the University has no intention of adjusting its MBA tuition rates in response to the government’s annual penalties.

Peter Todd, dean of the Faculty of Management, described McGill’s stated goal to bring MBA tuition up to the Canadian average, currently around $37,000 a year.

“For next year we plan to have the tuition set at $32,500 a year,” said Todd. “Right now our commitment is 100 per cent. This is what we’re doing, we stay the course with what we’ve done.”

Pat Tenneriello, president of the McGill Masters of Business Administration Student Association (MBASA), said MBA students were also disappointed with the provincial government’s reaction.

“Students are overwhelmingly in favour of the Faculty’s position, which is to move to this self-funded model, because it was necessary to maintain the prestige and the quality of the program,” said Tenneriello.

McGill’s press release described the penalty as “an arbitrary, elective, and unprecedented exercise of authority of government.”

“We cannot find another case where the government has levied a penalty like this against a university,” said Todd.

Todd noted that in the past McGill has applied a self-funding model – where a university program funds itself independent of government subsidies – to other programs in the Faculty of Management, but that this was the first time the government had punished McGill for doing so.

“Our understanding at the time, having done a number of self-funded programs, is that we create the program; we inform the government. The decision, as we understood it, was the decision for our Board of Governors to take, and that’s what was done at the time. The Board approved this change, and we went forward,” said Todd.

“We put these programs together, and the government certainly acquiesced to them going forward. They certainly didn’t make objections in the way they are right now,” he continued.

While Beauchamp does not have the legal power to force McGill to lower its MBA tuition rates, she does have the power to determine government funding to Quebec universities.

According to Todd, McGill had been in discussions with the Ministry of Education for years over possible alternatives to the self-funded model, without success.

“We’ve tried over time to work with the government on this, to explain to them that the funding models for universities – and particularly the funding models for business programs and MBA programs – in Quebec are broken,” said Todd.

Todd added that the University has been in “constant discussion” with the Ministry of Education, trying to make the case that the MBA was a special program.

“Our curriculum – with our integrated management approach that we use for the management core that teaches students about how the whole business works together – is not something that’s done. Not just at any other program in Quebec, but, frankly, not at any other program in Canada,” said Todd.

McGill’s press release also described how McGill’s new MBA program provides an average of $12,000 per student in financial aid, a “unique level of support for any Quebec university program.”

Tenneriello said that, though the overall financial aid situation had improved in the MBA program, the provincial government’s complete withdrawal of bursaries for MBA students is a significant financial challenge for students in the program.

“From what the school has done, yes, it has improved. From what the government should be offering students, it’s gone to hell. It’s awful,” he said.
The press release also noted that the shift away from government subsidization would save Quebec taxpayers about $1.2 million annually.

“It really is time to start to think about alternative ways of funding these programs, and in this case having the people who are going to most richly benefit from the program be the principal ones to pay for it,” said Todd

SSMU VP University Affairs Joshua Abaki, however, said the government’s penalty would keep the burden on undergraduate students despite anticipated increases in provincial tuition over the next three years.

“They will be anticipating new revenues, but it will go toward the [funding] gap that the $2 million created, so the burden will remain on the undergraduates,” said Abaki. “So in the end the argument they made at the beginning doesn’t hold at all.”